The case is officially called Michigan v. Grand Traverse Band of Ottawa & Chippewa Indians (7th Cir. July 14, 2014), but the opinion calls an earlier case in this litigation Asian Carp I, so this one will likely be Asian Carp II (or perhaps some higher number, if district court decisions are counted). An excerpt (some paragraph breaks added):

In this action, five states bordering the Great Lakes and an Indian tribe assert that the Asian carp either will soon invade, or perhaps already have invaded, the Great Lakes and that they are poised to inflict billions of dollars of damage on the ecosystem. Believing that the responsible units of government have failed in their task of protecting the Great Lakes, the plaintiffs ask us to step in and impose measures to ensure that the carp are forever blocked from the Lakes.
This problem did not develop overnight. Beginning in the early 20th century, state and federal authorities constructed a series of canals and channels that connect Lake Michigan with the Mississippi River. One part of that system is now called the Chicago Area Waterway System (CAWS). It has been vital to the growth and development of the Chicago region and the surrounding Midwest. In addition to reversing the flow of the Chicago River in order to carry Chicago’s wastewater away from, rather than into, Lake Michigan, the CAWS also established a navigable link between two of the country’s most important bodies of water. The CAWS is not the only place where the Mississippi basin and the Great Lakes intersect, but it is the one at issue in our case.
The other part of the problem dates from the 1970s, when aquatic farmers in the southern United States introduced bighead and silver Asian carp to their facilities in the hope that the fish would control unwanted plant growth. Flooding in the region, however, enabled the carp to move beyond the farms out into open freshwater systems, and ultimately to work their way up the Mississippi River to within six miles of Lake Michigan…. A fish kill conducted near St. Louis in 1999 showed that the Asian carp constituted over 95% of the biomass in the Mississippi at that place and time….
This appeal takes us into the sometimes-murky area of federal common law. Despite the pronouncement in Erie R. Co. v. Tompkins (1938), that “[t]here is no federal general common law,” enclaves of federal common law remain. One such enclave exists for cases dealing with “air and water in their ambient or interstate aspects ….” Illinois v. City of Milwaukee (Milwaukee I) (1972).
Environmental protection is an area “‘within the national legislative power ’ … in which federal courts may fill in ‘statutory interstices’ and, if necessary, even ‘fashion federal law.’ Federal courts look first to state law for this purpose, and even when borrowing the law of a particular State would be inappropriate, they are to remain mindful that federal courts do not have creative power akin to that vested in Congress. Federal common law also can be displaced “when Congress addresses a question previously governed by a decision rested on federal common law.” …
A public nuisance is “an unreasonable interference with a right common to the general public,” usually involving a significant interference with public health, safety, peace, comfort, or convenience…. Many types of conduct have been found to be a public nuisance: for example, one state’s introduction of typhoid into a river that runs off into another state; the discharge of “noxious gas” from one state’s copper works into the other state; and changes to a state’s drainage system that cause flooding in the farmland of another state. States may bring a federal common law claim to vindicate not only their interests in state property or property held in public trusts, but also in a quasi-sovereign capacity to challenge activity “harmful to their citizens’ health and welfare.” …
Before we address whether the States have stated a public nuisance claim, we must resolve a question we left open in Asian Carp I: whether it is legally possible to state a public nuisance claim against an agency of the federal government. This is a different question from whether the government enjoys sovereign immunity from such claims. Sovereign immunity, when it exists, cuts off a plaintiff’s ability to sue the government. Here we are concerned with the question whether the United States itself can create a nuisance, or if the law adopts the fiction that any action taken by the federal government is by definition in the public interest and therefore cannot be characterized as an unreasonable interference with a public right….
One might think that the federal common law doctrine of public nuisance exists only to create a uniform rule for resolving disputes between states in a way that comports with the national interest. On that view, the federal government is outside the scope of the doctrine, because its actions are by definition in the national interest.
There is another perspective, however, and we find it more persuasive. Federal public nuisance actions protect the interests of the public against harms created by an actor ’s conduct that impinges on a public right. Whether such harm is caused by a state or federal entity bears little relevance to the doctrine’s purpose, which is to protect the endangered right. And though the federal government is always at liberty to define what constitutes an unreasonable interference with a public right through legislation, the doctrine already accounts for this by contemplating displacement of federal common law when Congress has spoken directly to the question at issue….
For reasons including the limited scope of their delegated authority and the possibility of agency capture, we have no interest in sustaining a fiction that executive agencies’ undertakings so uniformly reflect the general interest of the public that they should be impervious to public nuisance liability….
Holding that federal agencies can be sued for creating a public nuisance is consistent with the rule that actions authorized by statute or regulation do not give rise to nuisance liability. In this connection, it is important to distinguish between legislative and executive functions. When Congress passes a statute, it weighs the competing public interests that would be served. Activities commanded or authorized by that statute reflect the public interest and so cannot be unreasonable intrusions on a public right. Quasi-legislative agency action is similar; agency rules promulgated pursuant to congressional delegation enjoy the same presumption that they reflect the public interest.
By contrast, agency action that reflects only the agency’s choice of a particular course of action to implement a policy may or may not be consistent with the underlying statute and regulations. The Restatement reflects this distinction when it recognizes that a “statute, ordinance, or administrative regulation” may authorize action, rather than making the bolder assertion that any action taken by the government cannot create a public nuisance….

But the court concludes that, on these facts, the plaintiffs haven’t alleged enough to constitute a public nuisance (some paragraph breaks added):

For a number of reasons, some of which we have just reviewed, the operation of a manmade navigable waterway by itself is not a public nuisance. The States recognize this: rather than asserting that the CAWS itself is a public nuisance, they allege that the manner in which defendants are operating the CAWS creates a public nuisance. We look, therefore, at what the complaint asserts on the latter point.
The manner of operation involves more than the maintenance of a manmade waterway between the Mississippi River and Lake Michigan. It also involves the steps that the Corps is taking and has already taken to prevent the carp from passing through the CAWS to Lake Michigan, including the presence of the electronic barriers, the regular monitoring activity, installation of screens on sluice gates, and the application of rotenone when a potential threat is spotted. The ongoing effort on the part of the Corps along with many other actors to craft a plan to combat the eventual migration of the carp to Lake Michigan is yet another aspect of these operations. The issuance of the Report was an important step in that effort, and the Corps is committed to pursuing whichever protective plan is selected. Even taking the States’ allegations as true, the defendants have been diligent in their efforts to operate a waterway that blocks the passage of Asian carp to Lake Michigan….
In the final analysis, the States’ complaint does not plausibly allege that the Corps and the District are creating a current or imminent public nuisance by their manner of operating the CAWS. Even on the assumption (favorable to the States) that the carp are advancing toward the CAWS and will establish a sustainable population if they reach Lake Michigan, none of the present allegations tends to show that the Corps’s current method of operating the CAWS will permit the Asian carp to pass. There is a notable lack of factual allegations that Asian carp are passing or are about to pass the barriers that the Corps has established, and the complaint does not plausibly allege that the Corps cannot or will not respond to more urgent threats if and when they arise. To the contrary, the allegations tend to show that the Corps is taking its stewardship over the CAWS and the carp problem seriously.
We offer several final comments about this case. The States’ complaint would require a court to direct the Corps to work toward implementing one particular solution to the threat of the Asian carp — hydrological separation. But we know from the Report that the Corps is making diligent efforts to find the solution best suited to accommodating the competing concerns of stopping the passage of the fish and preserving the publicly beneficial uses of the CAWS. A host of competing concerns (water quality, navigation, public enjoyment, cost) all must be weighed.
We know also that there is no quick fix here. Under these conditions, it would take an unusually strong showing to meet the requirements for equitable relief. The complaint does not present facts that, if believed, would show that hydrological separation is the only way to prevent the spread of the Asian carp. Cognizant of our relative expertise as compared with that of the responsible executive agencies, we are reluctant to interfere with the ongoing process to determine the best alternative for keeping the Asian carp out of the Great Lakes.
We do not want to be understood as taking this problem lightly. We have proceeded throughout on the assumption that the introduction of Asian carp to Lake Michigan would pose a grave threat to the public’s use and enjoyment of the Great Lakes. As we said in Asian Carp I, if new facts develop, the States are free to return to court based on those changed circumstances. Our decision pertains only to the complaint that is before us.
We also want to be careful that we are not misunderstood. The Corps and the District implied in their brief, and again at oral argument, that they could not have “caused” the nuisance because the fish are swimming lakeward of their own accord, without any human intervention. We dismissed this argument at the preliminary injunction stage, explaining that the defendants would “bear responsibility for nuisances caused by their operation of a manmade waterway between the Great Lakes and Mississippi watersheds.” We reiterate that conclusion today. Our decision does not depend on the fact that the Asian carp are advancing upstream of their own volition. It would be enough if the Corps and the District maintained the CAWS in a way that allowed Asian carp to swim through to Lake Michigan. It is the defendants’ apparent diligence, rather than their claimed helplessness, that is key to our holding today….